The super-deduction applies to companies eligible to claim capital allowances on plant and machinery (P&M). Contracts must be entered into on or after 3 March 2021 and the expenditure incurred between 1 April 2021 and 31 March 2023. Pre 3 March 2021 contracts are excluded, even if the expenditure is incurred after 1 April 2021.
The company must be within the charge to Corporation Tax, and the P&M must be new and not second-hand. The normal exclusions in relation to cars, assets for leasing, ships, connected party transactions, and the standard anti-avoidance provisions apply. There are special rules for the oil and gas sector.
For 130% rate assets, disposal proceeds will be taxed as a balancing charge in the disposal period and not deducted from the capital allowances pool. For disposals before 1 April 2023, the balancing charge will be based on 130% of the proceeds. For disposals in a period straddling 1 April 2023, the proceeds are time apportioned, and the 130% applied to the pre 1 April period.
For assets constructed over a period of time and partly qualifying for 130% allowances and partly under the normal rules, the proceeds are apportioned.
Disposals of 50% assets are dealt with by way of a balancing charge and apportionment, but there is no uplift.
There is the usual raft of anti-avoidance provisions in the draft legislation.
The super-deduction applies to companies eligible to claim capital allowances on plant and machinery (P&M). Contracts must be entered into on or after 3 March 2021 and the expenditure incurred between 1 April 2021 and 31 March 2023. Pre 3 March 2021 contracts are excluded, even if the expenditure is incurred after 1 April 2021.
The company must be within the charge to Corporation Tax, and the P&M must be new and not second-hand. The normal exclusions in relation to cars, assets for leasing, ships, connected party transactions, and the standard anti-avoidance provisions apply. There are special rules for the oil and gas sector.
For 130% rate assets, disposal proceeds will be taxed as a balancing charge in the disposal period and not deducted from the capital allowances pool. For disposals before 1 April 2023, the balancing charge will be based on 130% of the proceeds. For disposals in a period straddling 1 April 2023, the proceeds are time apportioned, and the 130% applied to the pre 1 April period.
For assets constructed over a period of time and partly qualifying for 130% allowances and partly under the normal rules, the proceeds are apportioned.
Disposals of 50% assets are dealt with by way of a balancing charge and apportionment, but there is no uplift.
There is the usual raft of anti-avoidance provisions in the draft legislation.
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3 March 2021
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